Once my record is expunged, does my U4, U5, or BrokerCheck show that I received an expungement award?
No. Upon completion of the process, there is no indication anywhere within the CRD system that you once had a Customer Dispute. Likewise, there is no indication that you sought or obtained an expungement award anywhere within the CRD system.
Is there a statute of limitations on seeking expungement of a customer dispute?
Although FINRA arbitration repeatedly rejects claims by investors against brokers or B/D’s which are beyond six-years old, the same does not hold true for those broker’s seeking expungement. The harm caused by denying a viable expungement request is great. FINRA’s 06-06-2016 requirement that all reps have a link to BrokerCheck on their websites made the damage of old disclosures much greater. The majority of expungements granted have underlying customer disputes which are beyond six years old. Regulatory Notice 17-42 is a proposal to shorten the statute of limitation to 1 year of the resolution of the customer complaint. Regulatory Notice 17-42 invites comment on the proposed rule until February 5th, 2018. The proposed rule has not been implemented.
Can “Pending” Customer Disputes be expunged?
Unfortunately, those Customer Disputes which are “Pending” are only viable after the status has been updated to reflect one of the final dispositions; Denied, Closed-No Action, Withdrawn, Dismissed, Final, Settled, or Award/Judgment.
Can the investor seek damages from me for a second time because I am attempting to gain an expungement award?
Investors are given six-years from the date of the occurrence to file a claim against you or your broker dealer for their perceived harm (Rule 12206). Unless the investor has already taken a settlement or had their claim heard by a FINRA panel, they retain the right to file a claim any time within the six-year window.
Who is notified that I am seeking an expungement award?
The B/D which reported the disclosure is notified as they are the Respondent. In addition, we must make a good-faith effort to notify the investor who made the complaint. Your current broker dealer is NOT notified of your expungement efforts, unless they are the broker dealer who reported the complaint.
Do I have to show up for the arbitration hearing?
Most expungement hearings are conducted via telephone conference. Although we will likely ask that you be available to present oral testimony on the date of the hearing, it is very unlikely that the hearing would require you to make a physical appearance. In the rare event that an in-person hearing is required, the hearing will be in your jurisdiction. Regulatory Notice 17-42 is a proposal that requires the physical presence of the FINRA Licensed Professional at the expungement hearing. Regulatory Notice 17-42 invites comment on the proposed rule until February 5th, 2018. The proposed rule has not been implemented.
Thankfully, Rule 2080 is not based upon how the investor feels or felt about the circumstances, nor does the rule require that the B/D whom reported the Customer Dispute agree with our request for an expungement award.
What if the investor or Broker-Dealer fights our expungement request?